How Much Letting Agents Charge & Cheaper Alternatives

If you’re looking into the financial costs of using a letting agent, the odds are you’re about to enter the game… welcome.

Since yesterday, I’ve been bitterly leading a tenant-finding campaign. I say ‘bitterly’ because any self-respecting and reasonably sane landlord knows that finding and/or replacing tenants, particular good one’s, is always a despicable chore, and never a pleasure.

One of the most undesirable aspects of the process is dipping into the coffers to fund the marketing, whether it be by paying a local agent (which is landlord hell) or utilising one of the other alternative means.

But first, let’s take a look at their costs. Please note, none of my examples includes the fees required to comply with the various landlord legal obligations, such as Gas Safety Certificates and EPC’s. I’m purely discussing letting agency fees today. If you want an idea of what the running costs are to be a landlord, you may want to checkout my blog post on the financial costs of being a landlord.

The cost of using a local letting agent

To clarify, the fees used in my examples are based on real life average fees I would incur at this moment in time from the local agents in my area. However, while each agent will set their own fees and are usually open to negotiation, I believe the below should demonstrate and reflect how the majority of local high-streets operate nationally, so should provide an overall picture of the glaring discrepancy…

* Tenancy renewal fees are tragically nasty thorns ALL landlords should be wary of. Essentially, if you source a tenant from a local agent, most of them will ask for an annual fee for you to ‘retain’ that tenant, even under a “let-only” service. It’s daylight robbery as far as I’m concerned, because we already paid them to find the tenant, yet they expect us to continually paying a tariff.

My local agents’ charge £120 and that’s comparatively reasonable (on the basis that the principle of the fee in itself is reasonable, which it is not). I’ve heard of some agents charging the equivalent of the initial full finder’s fee per year. So in my case, it would be £750. The agent’s that charge those insane rates can royally do-one!

Totally shameless!

Worthy notes…

Location – the ‘going rate’ of letting services can vary by location, so I wouldn’t go entirely by any ‘national’ or ‘average’ guidelines. To get accurate costings that will be applicable to you, I recommend contacting a couple of local agents and working from there.

Haggling – don’t forget, letting agents are open to negotiation and are often prepared to lower their rates!

Local agents are too rich for my blood!

Now, I’ve personally ditched the local high-street letting agent like a bad cold long ago, because to put it bluntly, I’ve never felt like I’ve received enough value in their (my local agents) ‘professional’ service to justify the heinous fees, and I know many other landlords feel the same. In fact, I think it’s safe to say that there’s a general consensus among society, from both tenants and landlords, that letting agents are generally bloody expensive. Of course, it’s fair game when you actually feel like you’re getting some bang for your buck. But when you’re paying through the ass for a sub-par service, it quickly becomes increasingly frustrating! And that’s precisely why I started investigating my other options. Best decision I ever made.

Ultimately, using a local agent isn’t even an option for me anymore, and I can’t see that changing in the foreseeable future. Every time I need to find a tenant I’m just reminded of how much money I’ve spent wasted on them, and how much cheaper it is to achieve the same result using alternative means. It’s truly a bittersweet sensation. On one hand I can’t help torturing myself by calculating the amount I’ve unnecessary blown on agency fees, on the other hand I feel liberated for eventually ‘seeing the light’- “I was blind, but now I see”

So since I’m currently going through the bittersweet emotions, I thought I’d highlight my realisations…

The objective of this blog post is to analyse the cost difference between the average cost of using a traditional high-street letting agent and other options available (e.g. doing it yourself), although it will probably seem like I have an agenda against agents. Ahhh well. I can only say that my intention is not to tar all agents with the same slimy brush or reduce their profession to dog-turd. Using a good local agent for the right price makes perfect sense for many landlords, but there are also too many landlords using them unnecessarily! They’re the landlords I want to liberate today!

The cost of ‘finding tenants’ without using a local agent (and my preferred method)

A common misconception among novice (and even experienced) landlords is that we need a local agent in order to find tenants efficiently, consequently we have no choice but to bow down to their obscene fees. FALSE! That really isn’t true, especially in this digital age.

You and I may not [allegedly] be as professional, knowledgeable or skilled in the trade as the ‘professional local agent’ (which is the common go-to rebuttal when agents hear of landlords going all independent), but my point is I haven’t received value from the professional service I have received so I refuse to continue funding it.

In any case, I’m going to break down the costs of acquiring a tenant since I stopped using a my local highstreet letting agents…

* The Professional Photography & Floorplans service is truly optional. I’ve found great tenants without them on many occasions, but to do a fair comparison between the two means, I included the cost (because most high-street agents include them as part of their package). Also, bear in mind, you’ll only need to pay for professional photos once because you’ll be able to reuse the same ones over and over, unless your property goes through dramatic alterations.

The easiest way to get started on the D.I.Y solution is by using an online letting agent…

So that was the comparison for the “Tenant-find” / “Let-only” Service (the “fully managed” is a little trickier, which I’ll address shortly). Evidently my D.I.Y method is a shitload cheaper, but it does require greater investment of our time, which should be valued and not forgotten (not that the agents on the other side of the argument wouldn’t remind us, and perhaps rightly so). Our time is precious! So I’ll leave it in your capable hands to value your time.

Personally, I find that even after investing my own time (on addressing the tasks that I’d otherwise have to pay an agent to complete) it still makes more financial and practical sense to do it myself. The process of finding tenants is like any other process- the more you do it, the easier and more efficient it becomes. Moreover, you continuously learn different ways of improving the process. For example, the biggest time consumer by far is taking viewings, so I do all my viewings in block-sessions, one after another i.e. I pick two days out of the week and organise my viewings on those days, so I get them all out of the way relatively quickly.

The cost of a ‘Fully managed’ service without using a local agent

As mentioned, it’s a little trickier to D.I.Y the “fully managed” service.

Actually, what am I talking about? It’s impossible. The entire point of landlords using a “Fully managed” service is to have someone else to manage their property e.g. handle all the irritable repair & maintenance calls (which isn’t necessarily the case when a landlord is only after a pure “tenant-find” service), so it’s a complete contradiction to D.I.Y.

But just to clarify, if you want to save a shitload of money, one of the best ways is by managing your own BTL. It really isn’t that difficult as long as you do your due diligence when finding and referencing your tenant. A good starting point to help determine whether managing is a viable and sensible option for you could be downloading my free guide for new landlords. Fair warning, it hasn’t won any awards or been critically acclaimed by anyone important/influential, but I’ve been told it’s alriiiight!

That said, if you’ve done the decision making and concluded with ‘fully managed’ being the best solution for you, you do have a cost-effective online alternative to your local agent. Not really surprising though, considering that in this digital age there’s pretty much a cheaper online solution for everything.

Here’s a list of online letting agents that provide worthy fully managed services, some of which provide viewing services (for an additional chunk of change, mind you). The best part about them? Unlike with high-street agents, you won’t be tied into any lengthy contracts, because they all operate on a month-by-month contract…

Letting Agent

Contract

Notes / Includes

Price

Howsy

Duration
Month by month

Notes / Includes

Solution for Fully Management Service!

Will market your property on Rightmove, Zoopla + more.

£0 up-front - nothing to pay until tenant moves in.

Pre-qualification of all tenants before viewing.

Full references & credit checks for tenants.

Tenancy agreement drafted and signed.

Viewings scheduled based on your availability.

Rent collection service.

Full repair management using your contractors, getting you quotes or using our national provider.

Inspections: full photographic reports after 3 months and then 6 months thereafter.

*Sign up to get 2 months FREE property management when you pay the first year upfront - just mention you came from Property Investment Project.You can still cancel at any time and you will be refunded the difference.

Property management - all repairs and maintenance issues will be handled directly by Upad (i.e. a tenant will never need to contact you directly), and they will also deal with the utility companies and keep accurate records of all payments.

Conclusion

How do I wrap this up?

Hmmm.

Ok, so I’m not denying the need or requirement of the traditional local letting agent, although I can’t help but feel they’re a dying breed as other options are becoming available. I guess the entire point about this blog post is to make it apparent that there are significantly cheaper alternatives to the traditional route… if you’re interested in them, that is.

Either way, do your research and due diligence… and, good luck :)

If you have any questions or experiences to share, grab the mic and speak up. I’d love to hear all.

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27 Comments- Join The Conversation...

Andrew Mills24th September, 2010 @ 14:35

Seems like you could make a little extra money finding tenants for other landlords...

1

andy sheppard24th September, 2010 @ 15:51

I agree with your comments. Just started the property game with my first buy to let that i purchased at auction. These agents already piss me off with a load of 'experience' as they call it, bullshit to me! I am trying to learn all of the ins / outs for myself because these agents can stick their fees where the sun can't shine! I am sure it is not easy but I would rather learn the hard way than give my money away.

2

GillsMan25th September, 2010 @ 10:11

"But to me, sounded more like diarrhea Soufflé." Hahahaha! Brilliant.

3

Smithy25th September, 2010 @ 11:05

Hi Landlord,

You wrote recently about using Upad to find a tenant - cost £59. They advertise on Rightmove etc.

They were at the Landlord & Letting Show, giving out cards offering a 10% discount. I won't be using mine, so if you want to use it, the 'discount code' is BD001.

PS: the little cartoon figure in the mac which features on your website. Is that really what you look like?

4

The Landlord1st October, 2010 @ 11:11

Hey Smithy,

Thanks a lot for the code. Right now I don't need it, but I'm sure someone else will use it :)

Andy - owning a buy to let involves a lot of regulations and legislation and if you get it wrong could cost you a whole lot more than what a decent agent charges.

Admittedly not all agents are great, but I think you're missing a trick if you don't find a decent one to start with and learn from.

Mistakes can be expensive - esp. if your tenants decide to hang you out to dry.

6

andy sheppard5th October, 2010 @ 18:59

Sam

Point taken but at 7.5% to 12.5% a month and a finder fee of about £300 it actually takes the profit away. I am undertaking a landlord association course to understand the laws and stuff and will probably try a local advert and a free add with makeurmove. I may be wrong but if i understand the ins/outs/pitfalls for myself then as my portfolio grows I will be able to engage with an agent on an informed basis and hopefully get a deal that fits what i want to pay for. I have nothing against agents but i do have a problem with then fees they charge compared to the actual work content, remind me a bit of bankers - now dont get me started on that one!

7

Sam Watterson3rd February, 2011 @ 22:32

The business I run offers a similar service, I would conduct the viewings myself though. I charge £200 to let a house and that includes photos, writing the advert, arranging the viewings, referencing the tenants, sorting out contracts moving in the tenants and taking meter readings. People use my services because a buy-to-let is usually the fruits of additional cash brought about by a successful career..... The last thing a busy, stressed professional wants to deal with is muppets ringing at 10.30pm to arrange viewings or rushing home from work just to be stood around for half an hour waiting for someone who doesn't turn up. I should know I rented out 4 houses whilst having a full time job, it was such a fucking pain in the arse that I quit my job to do it full time for other people. The oldest business model in the book Hassle for cash...... I despise people who ring me because of an advert on gumtree, they are weak individuals who couldn't qualify a scotch egg let alone a potential tenant..... As for the high street, pfffff.... I've usually found a tenant before they've finished their coffee and worked out whose lost the office camera.
The problem with a part-time landlord is they make mistakes, mistakes I made 5 years ago that cost me money, I wouln't make the same mistakes again now for me or for anyone else... Feel free to look at my web-site and deliver feedback as you see fit. www.morrison-watts.co.uk

8

Helen11th June, 2011 @ 15:14

I have been letting a small number of flats for 15 odd years and have never used an agent. Just lately, I discovered 'Brilliant Lettings', where for a flat fee of £29 per month, my property will appear on all the main lettings portals including rightmove and findaproperty.....so I tried it and let me flat in less than 2 days! It is cheaper than putting an ad in the local papers which is how I used to advertise. With services like this, why would any landlord use an agent?

9

Mark Sesum5th September, 2011 @ 01:51

I am a contractor, an electrician by trade, but with 30 years experience in most trades due to continuous training. I am Gassafe and NICEIC registered. I do work for many landlords and agents and it makes me laugh to hear them talk about legislation, they wouldn't know it if it fell out of thier arse. Fortunately for them, most tenants don't either which is the only thing saving thier backsides at times. In 30 years out of the hundred of landlords I've met I can only think of 4 that were likeable, honest and didn't mess me about, either with money or in some other way. In that same time I can't think of one agent. Not one. So many let properties are in appalling condition yet most landlords consider a lick of paint and a new cheap carpet as sufficient. This year, 2 tenants of landlords I work for have had serious electric shocks. One had to have her heart re-started. Both these properties, I had carried out testing on and recommended re-wiring yet I'm still waiting on payment for the original reports! (one landlord said he didn't owe me for 6 hours work as all he wanted was an 'electrical safety certificate'. Such an item doesn't exist, and if it did I couldn't provide one as the installation wasn't safe!) With the housing shortage getting worse and a boom expected in private lettings, I hope the government find time to properly regulate this joke of an industry.

10

Carly Nelson5th March, 2013 @ 17:36

I wouldn't want you as a Landlord.

11

Richard4th June, 2014 @ 14:57

not all agents are looking to make a quick buck, we for example don't charge the landlord anything I give a completely free service and still do all those bits and pieces,
also your forgetting management you could also do that for your self but if you have 10 or 15 properties isn't that a strain on you? I also help elderly landlords who have tenants who refuse to pay there bills and need help with legal advise on how to section 8 and advise and help through the whole process, what about tenancy agreements and contracts some new landlords have no idea what their rights are as landlords or what the tenants.
rights are. it helps to have a trained agent who gives excellent customer service who look after and look out for landlords.
and to be quite honest if I was a tenant who heard or read the language your using I'd be shocked and insulted.

12

Andrew5th July, 2014 @ 14:32

Some letting agents are not very good granted however there are a few of us who have excellent services we provide at a good value for money rate who regularly get referrals from clients.

The fact that you have just slated agents with such bad language shows your an absolute idiot. You then tried a back door sales pitch yourself shows that anyone can be slightly untrustworth and lets be honest your 20p tenancy agreement will count for nothing in court.

Everyone knows you get what you pay for in life and service is rarely purchased on price alone. We refuse landlords who are clearly completely in the business to rip tenants off and have little experience unless we manage the property as we know that tenants are usually left out to dry and the properties are not in great condition.

Oh yea try a job in stand up comedy, dont forget to download my WHSmith tenancy agreement for £4.99 as it will protect you from nothing and help my bank account. Tight landlords are the reason crap agents exist.

13

Tim19th November, 2014 @ 11:21

In my experience, as a tenant, letting agents are pure parasites on the arrangement. In any other area of my life, the free market would allow me to avoid them. Unfortunately I have to live in a house, it is expensive and time consuming to move, and these agents swarm all over you extracting every last penny possible. I'm now being asked for £250 just to renew a years tenancy that they're making money off every month anyway, for doing nothing whatsoever.

I think the final straw is the charge for references. That one really makes my soul sad.

Their primary business case is to stand between landlord and tenant, and monetise things that have no place being monetised. Parasites.

14

terry23rd January, 2015 @ 10:42

what a load of nonsense - you are arguing about £100. you are really trying to say that someone doing some work for you, making phone calls and running around for you is not worth a measly £100 extra?

perhaps you dont have anything better to do with your days, but most of us would happily pay someone to do their job so we can get on with ours as there isnt enough hours in the day to do everything.

shall we repair our own boilers, cars and whatever else and put every trade out of work so that we don't have to pay anyone to do anything that we can do ourselves.

Its not the way the world works.7
strop being a tight arse.

do you not know that giving is better than receiving?

you reap what you sow and all that!

15

The Landlord23rd January, 2015 @ 11:13

@Terry

It's the principle, and it's all relative- didn't realise I needed to clarify.

They're charging 66% more. If you want to pay 66% more for something that equates to about an hour or twos work combined, then go for it.

Now, for a landlord that has 10 properties, for example, that's £1,000 saved.

How many people earn £50 an hour (that's what it approx equates to)? Not many.

It's not about being tight, it's about people making savings where possible in this tough market/economy. I'm pretty sure most people would be prepared to work 2 hours for £100. If you're not, then you're in a better position than most people, and congratulations.

All I'm doing is highlighting a way people can save money, no one is being forced to grab the saving. What's wrong with you?

16

James Duncan15th February, 2015 @ 23:04

What a bulk of hate and bollocks.
Instead of spreading your venomous view you better learn how to see the reality from different angles otherwise you will keep getting some likes from fellow tightviewers but will be a laughing stock for the rest.
Making £50-100 from customer looks OK but how many you can get a week...3-4-5?
Will it be enough to survive with all expenses around your agency?
As Terry pointed you can pick every trader's business in town like that and pretending you're Mr.Supersaver or Mr.Doitall .. or considering your language most probably Mr.I'lldoyouall.
Of course every average intelligent Landlord can deal with it by himself and there is nothing wrong with that.
The question is about Landlords who does not have the time and knowledge or stamina to deal with all problems along tenancies (which you don't mention as you think it's only collecting money like), don't want to be bothered and keep up with ever changing legislations or those who live in another city, county or work offshore/abroad.
How about them then?
May be should send them to you to teach them your bullying tactics.
Agents are there because the market needs them. It's not in all cases of course but still needs them.
Otherwise they will disappear.
If you are trying to be next Martin Moneysavingexpert ... try harder but avoid that hate you are spilling all over.
Good luck.

17

James Duncan15th February, 2015 @ 23:28

PS.I do admit there must be some "no good" agents on the market but so are Landlords and Tenants. Instead of focusing on them use common sense and market forces to rise above.
Kind regards,

18

Rick Abel22nd January, 2018 @ 23:42

Hi, I'm considering starting a letting agency. I'd be interested in hearing more from you and understanding how a new agency could deliver real value yet still be profitable. It sounds like the current model just doesn't work.

Email me if you have time.

Thanks

19

Johnson Isabella2nd April, 2018 @ 04:53

Some letting agents are fraud but i only go to companies which have goodwill in the market and provides best tenant finding services at very affordable cost. tenants.com is one of the best company in USA that let help in finding best homes for rent. Along with finding services they complete all documentation and agreement work which is very sensitive part of letting services.

20

Charlie12th May, 2018 @ 08:57

What this article highlights is that the perception can often be very different to the reality. Whilst the cost may seem high, the majority of agents dealing with rentals run on extremely tight margins. Those that deal with a significant number of high end properties may be doing very well. However, the irony for those that aren't so fortunate is that they generally end up doing far more work and deal with a lot more hassle for a fraction of the commission.

21

Chris8th June, 2018 @ 19:22

After selling my property just over 4 years ago, losing the property I was due to buy I chose to rent rather than make any hasty decisions.

Due to several unscrupulous landlords and collaborative agents I will be moving house in the autumn for the 7th time!!!

Let me break it down briefly with each rental.
1. Landlord was not paying his mortgage, had to leave after 6 months shorthold.
2. Landlord promised to put in a doorstep and handrail (to help with my mobility issues), he didn’t, so I found a bungalow and moved after a year there.
3. After living there a year I wanted to pay month to month, agent said ‘landlord agreed but will put rent up £100 a month! When I asked for landlords details so I coul contact and negotiate, agent refused. I have since found out this was against the ‘code of conduct’.
4. Was clear to agent I needed a long term let, they assured me it would be but I would need to sign for 6 months initially. Landlord wanted to sell after 6 months! I offered to buy but they turned down my offer.
5. Had to leave this property for family reasons, will mention that landlord used to turn up when he felt like it, I kept reminding that I’d need at least 24 hours notice. On hand over day I took some rubbish to the tip only to find on return that landlord had let himself in and was fiddling about the place.
6. Moved here to be closer to family and AGAIN stressed the importance that I wanted long term. Signed up for a year, discovered landlord left loads of crap here, hadn’t fixed a leaking conservatory roof, and isn’t answering contact from agent regarding extending my contract. I have been reliably told landlord only wanted a tenant for a year to recoup some costs of renovation and will be selling.
Sadly I am not in a position to buy now, having had to f’ing move so many bloody times.
Tenants get shafted so much, it’s almost the norm!!!

A little introduction...

I initially started this blog because I wanted to document my every step to becoming a BTL landlord,
in hope that others' (with more experience) would discover my dronings and have the heart to help me - a beetle on its back - along the way. I literally didn't have a clue about being a landlord
when I started this website.

Having expanded my property portfolio over the years, I now occassionally blog about my bitter life as a Landlord, so fellow Landlords (prospective, new, and seasoned) can learn from my few successes and frequent failures.

Important

It's important you understand that this is a personal blog, and the aim is to provide the best
guides, tips, tools and techniques to being a Landlord. Everything I share is based on my own personal experiences as a landlord,
so the information is NOT guaranteed to be perfect, and should NOT be used as legal or financial guidance, so do note you use the information at
your own risk and I cannot accept liability if things go wrong. You should always seek advice from a qualified professional for any legal or financial matters.
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